UK Property Process

Investing in property for the first time? Here are 7 tips you should consider to know how to invest in property UK

Property can be a good investment for those looking to make extra income on their savings. Investing in property UK is seen as a relatively stable asset and can reap better financial rewards than having savings sitting in the bank. However, if you invest in the wrong sector or location, you may not see the financial benefits. If you are investing in property for the first time, there are certain things you should consider ensuring you are making the correct investment decision to reach your financial goals.

How to invest in property UK – 7 tips

  1. Do your research

There are many property investment sectors that are attractive in their own way and suitable for different investors. Decide whether you are looking to achieve capital growth or rental income. Buy to let investments are more suited to the investor who intends to keep it for the long term to achieve capital growth. Hotel room investments and student property investments are more suited to investors who want to keep the property for a set number of years, with many opportunities offering buy back options and guaranteed yields.

We have compiled a student property investment checklist and a buy to let investment checklist to shed light on more things you would need to consider before investing in these types of property.

  1. Consider how much capital you have available to invest

Property investment is relatively accessible in that there are opportunities for people with varying amounts of wealth. Hotel room investments and student property investments typically have a lower entry point starting at around the £55,000 mark.

Buy to let investments have a higher entry point all the way up to the luxury central London apartments such as those in Principal Tower will have hotel style facilities including spa and members lounge – starting prices from £985,000.

It is worth noting however, that hotel room investments and student accommodation investments are typically classified under commercial and therefore it is difficult to obtain a mortgage on them. Therefore, you would need to ensure you have the entire amount up front or at least by the time the development has completed if it is a new build.

  1. Finance


If you are considering a buy to let, you may need to arrange a mortgage. UK residents can typically qualify for up to 75% loan to value with interest rates circa 3.5% (June19) whereas specialist lenders could offer overseas investors up to 60% loan to value at slightly higher rates of interest.

Monthly repayments will affect investors’ net yield, in particular if interest rate increase. Visibility or returns can be secured with a fixed rate mortgage product.

  1. Tax

Consider how much the net yield will be after all the repayments, and how much tax you would have to pay on the investment. In the UK the standard personal allowance is £12,500 per annum for the 2019 – 2020 tax year. Personal income, which includes property income, won’t be taxed on this portion.

In Scotland the tax bands are slightly different. If you are investing from overseas and reside in the European Economic Area or in a country that has a double taxation agreement with the UK, the personal allowance will also be applicable to you. You will still need to double check whether your income will push you into the next taxation band, and how this will affect the overall profitability of the investment.

  1. How much time can you spare attending to your investment?

If you decide to invest in a buy-to-let home which does not have a management company in place, you will have to take control of the day-to-day running of it. This can be time consuming and if you cannot be present to do that (you have another job or are overseas) a buy to let without a management company would not be suitable for you. Usually the buy to let investments One Touch offer – have a management company in place who would remove that hassle for a competitive yearly management charge.

  1. Look at the developer’s record

Perform some background checks on the developer. What do their accounts look like? Who is the company owner? What do their previous developments look like – were they late, do they look like the CGIs, are they paying their investors on time?

These are all things you would need to consider before investing in a development. Of course, you could always use the services of a property investment company such as One Touch Property, who performs due diligence on the developers we work with to minimise the risk for you.

  1. Off-plan, or a completed development?


Here at One Touch we offer both off-plan investments and opportunities in completed developments. Of course, their appeal differs depending on what you want to achieve from your investment. Off-plan is generally less expensive and there are often payment plans in place which is beneficial if you do not have all the capital immediately to hand to invest. The drawbacks are that you would not be earning rental yield straight away and there could be unexpected delays – although this risk can be minimised if you perform due diligence on the developer.

Investing in a completed development means that you can start earning income straight away and there is no development risk. However, you will need the money immediately to invest and if a rental guarantee is in place it could be for fewer years depending on when in the contract the existing owner decided to sell.

If you are a first-time investor it is likely you will have a lot of questions that you want answers to before making an investment decision. Here at One Touch Property, we guide both experienced and inexperienced individuals to help them make a decision that will achieve their financial goals.

Want more information? Read our guidance article on the UK property purchase process explained.

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